81% of Americans believe housing is the best long-term investment they can make. However, to get a return on that investment, everything from the roof to the foundation has to stay in good working condition.
And it’s not just the house itself, but the contents inside. Some of the most important and expensive items are the appliances.
While they are not protected under a typical home insurance policy and their warranties expire after a couple of years, a home appliance insurance can offer the protection they need.
Learn everything you need to know about home appliance insurance in this ultimate guide to home warranty plans.
What is home appliance insurance?
Home appliance insurance is sometimes referred to as a home warranty plan, home appliance protection plan, or home warranty insurance. No matter which name you hear, it is a maintenance contract that serves to protect the appliances and systems in a home against normal usage and wear-and-tear.
How is appliance insurance different from a homeowners insurance policy? It covers repairs and replacements for failed home systems and appliances. It will not replace appliances that are stolen or lost due to a catastrophe.
On the other hand, homeowners insurance covers your home, other buildings on your property, and your personal property (including appliances) against loss due to natural hazards and theft.
While they each serve different purposes, having both will protect your home and appliances in most situations.
How do home appliance insurance claims work?
If you have a problem with a covered appliance, you will contact your company to file a claim. Once the claim is processed, the company will schedule an approved contractor/technician to check on the problem. A service fee (deductible) is paid at this point.
The contractor will decide which solution is best for the appliance, whether that be a repair or a replacement. Once resolved, you can get back to normal life and your coverage will continue.
Benefits of home appliance insurance
The biggest benefit of home appliance insurance is the potential to save money on appliance and system maintenance. You pay a relatively small annual fee and can easily keep everything in working order.
There are no big out-of-pocket expenses when something unexpectantly breaks, which can help provide homeowners with peace of mind.
Additionally, if you decide to sell your home, the home warranty plan will add value which can help to entice buyers.
What do home warranty plans cover?
So what is commonly covered by home appliance insurance? It covers numerous systems and appliances throughout the home that may include, but are not limited to:
- Smoke detectors
- Hot and cold water dispensers
- Air conditioning
- Water heater
- Garbage disposal
- Central vacuums
- Music systems
- DVD players
- Ceiling fans
- Microwaves (built-in)
- Clothes washer and dryer
- Ice makers (free-standing)
- Trash compactors
- Garage door openers
- Food processors (built-in)
You can opt for the blanket coverage if you have many of the systems and/or appliances included in the plan. Or, if you only need coverage for a few items, you can build your own plan and potentially save.
Common exclusions in home appliance insurance
What’s not covered by home appliance insurance?
It will differ with each company but here are some examples:
- Accidental damage and theft
- Appliances or systems that exceed age or value limits
- Select brands
- The cost of parts
- Pools and hot tubs, well pumps, septic pumps, and guest units
- No-claim periods might exist, where you aren’t covered for the first few days or weeks of a policy
- Pre-existing issues
- Unusual wear and tear
- Code violations
- Work where permits are needed
- Improper maintenance or installation
Be sure to read the fine print before choosing a plan so that your claim isn’t unexpectantly rejected. Further, read company reviews to find out if there are any recurring complaints about denied claims or other issues.
Are home appliance insurance policies worth the money?
First, we have to answer, “What is the average cost of a home appliance insurance?”
Shawna Bell of Landmark Home Warranty says that annual premiums range from $300 to $600, on average. Deductibles (aka call fees) are usually around $50 to $60.
To find out if appliance insurance makes sense for you, take an inventory of the appliances you have in your home. Figure out their estimated lifespan and estimate how much it will cost to repair or replace them.
Here’s a quick guide to the average appliance repair and replacement costs in the U.S., according to Home Advisor and Angie’s List.
Additionally, here is the average lifespan of various appliances, according to the National Association of Home Builders:
If you can save significantly by paying the annual fee and deductibles (when applicable), then it makes sense to sign up for an appliance insurance plan. Alternatively, you can stick with the basic manufacturer’s warranties and pay out-of-pocket each time you need a repair or replacement.
A better option, yet still not the best, is to purchase the extended warranty on each of your appliances at the point of purchase. Then, you will have more protection.
However, the home appliance insurance covers all of your appliances in one plan. It is easier to manage and will extend beyond any other warranties. While a brand new home with brand new appliances will likely not need it for a few years, it will prove to be valuable as appliances reach the end of their lifespans.
Run the numbers to see if it is the best solution for your specific situation.
15 key things to look for in home appliance insurance
If you decide a home warranty plan is right for you, the next step is to find the right provider.
When shopping around, be sure to consider the following 15 factors:
- Is the company licensed, bonded, and insured?
- What are the coverage details and restrictions?
- What is excluded from the plan?
- Does the company have a good reputation (read home appliance insurance reviews)?
- What are the company’s hours? Do they have an emergency 24/7 service?
- What is the cost (annual premium and deductible)?
- What are the policies for repair and replacement?
- Are there limits on how many service calls you can make?
- Will they cover 100% of the repair or replacement? Are there caps?
- Are there service fees in addition to deductibles?
- What is the claim process?
- Do you have to use the company’s network of providers?
- Is there a waiting period before you gain coverage?
- How long does it take for a service visit?
- Does the company offer any discounts?
FAQ on Home Appliance Insurance
Is home warranty the same as home insurance?
While both are great protections to have, home insurance and home warranties offer different types of protection. Purchasing both will cover your home, belongings, appliances and system components in case they need replacement or repair.
What is included in a home warranty?
A home warranty will typically cover most major components of large home systems, such as your HVAC (central heating ventilation air condition), hot water heaters, plumbing, electrical and more. It may also cover regular appliances such as washers, dryers, refrigerators and stoves.
Can a home warranty be purchased after closing?
They can purchase it through a real estate transaction where they will get a discount if they purchase the home warranty within 30 days of closing. Homeowners purchased a home warranty as a protection plan for their appliances and systems that will inevitably fail.
How long can you have home warranty?
Builder warranty policies typically cover up to 10 years of structural defects; one year of coverage on items such as stucco, drywall and paint; and two years of coverage on HVAC, plumbing and electrical systems. Appliances are typically covered for about six months.
How much should I pay for a home warranty?
For basic home warranty coverage, plans average from $350 to $600 per year. For extended coverage, warranties add an additional $100 to $500 per year, depending on the number and types of items added.
Overall, you want to ensure the company can protect your appliances and systems at an affordable price. Further, customer service is critical. Look for a company that has a good reputation for satisfying customers.
You don’t want to find out that your provider has a slow response time or high claim denial rates when your air conditioner is broken in the middle of summer.
So, do your due diligence ahead of time to find a reputable company that works well for your circumstances.
Lastly, remember, the home appliance insurance doesn’t cover damage or loss due to theft or natural disasters. That falls under home insurance policies.
If you need home insurance, browse and compare leading providers here.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.